As a former European Automotive correspondent for Reuters, I’ve a spent a few years writing about the industry. I will penetrate the corporate hype and bluster and find out how these gigantic enterprises are really doing. I also love to drive their magnificent machines, and their more modest ones. I’ll be telling you if the technology works, too.

The cost per car of implementing these rules amounts to roughly three times the amount of current theoretical profit, so expect much higher prices for cars and diminished profits for already financially pressed companies.

The new rules, which require an average fuel consumption equivalent to 57.4 miles per U.S. gallon by 2021, include several concessions to the German manufacturers like BMW, VW’s AudiAudi and PorschePorsche, and DaimlerDaimler’s Mercedes, in the form of so-called “super-credits” which give allowances for electric and plug-in hybrid vehicles. This will enable the Germans, and British-based and Tata of Indian owned Jaguar Land Rover, to continue selling some of their big gas-guzzling and high profit margin sedans, sports cars and SUVs.

VW will need plug-in hybrids like the diesel-electric XL1 to cut its fuel use

The rules were approved by the European Parliament earlier this week, after a tougher version was vetoed by Germany before its general election last September. The new rules allow a one year delay in some of the rules, and bigger “super-credits”.

The regulations are even more stringent than the U.S. ones, which demand average fuel consumption of 54.5 mpg by 2025. Current E.U rules require 43 mpg by 2015.

Environmental groups like Brussels-based Transport and Environment (T&E) complained about the delay, but said it will be good for consumers who will get much cheaper fuel bills because of more efficient engines.

“Whilst the one-year delay to the regulation was unnecessary, this is still a good deal for the E.U. economy, drivers and the environment – reducing fuel use and CO2 (carbon dioxide) emissions by 27 per cent over six years,” T&E’s Greg Archer told the Financial Times.

Critics say if cheaper fuel bills are the target, cutting fearsome European gasoline taxes would be easier, cheaper, and make more sense. In countries like Britain, this adds more than an almost unbelievable by American standards 70 per cent to the price of gasoline. Others say that this push for more fuel efficiency in the name of curbing man-made global warming is losing credibility as the scientific link between increasing carbon dioxide and rising temperatures is undermined by the latest evidence.

“VW’s large exposure to Europe means that the absolute cost headwind for VW will be the biggest,” ISI said.

In 2013, VW and its various brands including Audi, Skoda and SEAT, sold 2.8 million vehicles in Western Europe for a market share of 24.8 per cent, according to Automotive Industry Data.

ISI said Peugeot-Citroen of France and GM Europe had achieved impressive results in cutting fuel use, despite making huge losses.

“The almost polar opposite to this situation can be seen at the VW brand which despite being compliant, still has a much higher CO2 footprint than (Peugeot-Citroen) or GM, despite selling vehicles of roughly similar weight,” ISI said.

Last year ISI published research saying the industry faced cumulative costs of 12 billion euros ($16.4 billion) from the new rules by 2021. ISI said mass car manufacturers generate roughly only 200 to 300 euros ($273 to $410) profit per vehicle, and CO2 rules would add 1,000 euros ($1,365) to the cost of every car. Most manufacturers had already reached the 2015 target of 43 mpg, which is expressed in terms of grammes of CO2 per kilometer, in this case 130 g/km.

But ISI said getting down to 54.5 mpg (95 g/km) would be much more difficult.

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